Assam proposes 'green cess' on polluting sectors, cuts VAT on piped gas to boost clean energy

The Assam government on July 10 proposed a new 'green cess' on polluting industries and activities, reduced VAT on piped natural gas (PNG) to encourage cleaner fuel, and announced a tax incentive for electric vehicle buyers as part of its 2026-27 budget.

Presenting the budget in the Assembly, Finance Minister Jayanta Malla Baruah said the government would introduce a green cess based on the principle that "those who contribute to environmental degradation should also contribute towards its mitigation".

The proposed levy will apply to identified polluting sectors, including stone crushers, coke-based industries, brick kilns, commercial extraction of groundwater, transfers of second-hand vehicles and other environmentally sensitive activities to be notified by the government. The budget, however, did not specify the rate of the cess.

Baruah said revenue generated through the green cess would be used for afforestation, pollution control, biodiversity conservation, climate adaptation, green energy, water resource management and other environmentally sustainable infrastructure.

The government also proposed a sharp reduction in VAT on piped natural gas from 14.5 per cent to 5 per cent to make cleaner fuel more affordable and accelerate the expansion of city gas networks.

Baruah said piped natural gas infrastructure is being developed across Guwahati, Dibrugarh, Jorhat, Tezpur, Darrang, Baksa, Kokrajhar, Nagaon and the Barak Valley. "To reduce household energy costs, promote cleaner fuel and support city gas expansion," he proposed the tax cut.

According to the budget, Assam has already provided more than 13,500 domestic PNG connections and established 46 CNG stations across the state.

To encourage electric mobility, the minister also announced a 3 per cent Motor Vehicle Tax subvention for citizens purchasing electric vehicles during the current financial year.

The budget further proposed extending the exemption from Electricity Duty on captive consumption of electricity generated from renewable energy sources for another three years, from April 1, 2026, to March 31, 2029.

Highlighting the state's push towards cleaner fuels, Baruah said the government is committed to promoting compressed bio-gas (CBG). Oil India Ltd has planned five CBG plants in Guwahati, Tinsukia, Sivasagar, Jorhat and Silchar, with the Tinsukia project already around 40 per cent complete.

He also said a new CBG plant is being developed at Kalgachia in Barpeta through a partnership between Suzuki R&D Centre India, NDDB and North East Dairy and Foods Ltd.

Baruah said the government is finalising a dedicated CBG Policy for Assam, adding that the initiatives would expand clean energy production and help position the state as a major hub for compressed bio-gas.